tv Fast Money CNBC January 15, 2013 5:00pm-6:00pm EST
day for financial services and this is more proof. like it or not, this group is squarely in the hairs of everyone. now withstanding this week in terms of the earnings, all of this will likely combine to change business models. that will mean further asset sales, a more transparent world with increasing moves toward simple businesses of plain vanilla banking. sounds like a good thing and perhaps it is in some corners but remember, many states have relied on huge tax revenue from these companies. they, too, face a new reality. before we go, take a look at the day on wall street. the dow jones industrial average closed at the highs of the day. had before down 61 points at the worst. the nasdaq down a fraction and the s&p 500 up a fraction. that will do it tonight. thank you so much for being with me. have a great night. but don't go anywhere, because "fast money" begins right now.
live from the nasdaq market site in new york city's times square, i'm melissa lee. apple breaks below $500. a look at why investors are jumping ship. facebook face plant. shares fall after the social media giant unveils its new search feature. big bank earnings. what's riding on numbers from goldman sachs out tomorrow? first, straight to our top story and that's apple's slide. the stock is down 24% over the past three months. should you be a buyer or seller? let's go to the chairs and you were a buyer, keith, today. >> yeah, buy it. at the end of the day, the stock was as newsy as newsy gets. not been above valuation. cheap gets cheaper when growth is slowing. i think everybody was saying something bearish about it. we got the signal between $482 to $492. you buy it for a trade to $518. >> we talked about owning 500 puts to protect against the move with the stock sharply breaking below 500, we exercised -- not
exercised, sold those puts today and effectively that has us getting longer. >> right, the price in the stock was not good in today's session. >> it was lousy. a few weeks ago when the stock was mid $520s, we called it no man's land. we flagged $550 or so or look for $480 on the down side. and you basically got within close enough, you got your $480 today. i absolutely see the head winds in apple and long-term i could see it going lower, i think for a trade, as keith just said, yeah, if you've been looking for a level and looking for the market to be as negative as they possibly can be, now is the time to play the other side. >> i hate to jump into chorus here, but the traders here in us say this is way overdone. the fundamental side, we're going to talk about shortly, but if you look at what "the journal" said, the supply chain order front is not new news.
i would be a buyer, in fact, i added some last friday, i think you add more and i think somewhere around actually $480, the stock has bottomed. >> let's get more on the stock, bring in stewart jeffrey. he hit the price target down from $530 down from $660. you said the down side to apple could be $400. what are the factors in that scenario? >> well, the iphone drives most of the gross profit. with some of the weakening data points that we're seeing around the iphone 5, we're concerned that's the start of a more normalized moargin outlook for the iphone. if you take it down to 42%, 43%, which is the historic peak for rim and nokia, then you get an eps of around $38, $42 and you get value down to $400. >> so, let me ask you, when you look at the gross margin issue, how much do you look at gross margin percent versus absolute
dollars? we see them sell more of a cheaper phone, let's say, we could see gross margin dollars expand. >> we could. we want to look at gross profit dollars, but you need lots of growth. so, we'd like to see gross margins being maintained and all the new unit growth coming in with incremental growth and the concern is, if they have to do a $350 iphone in emerging markets, that will almost certainly have to be priced at 35%. there's no indication that's being launched this year but we suspect it might be early next year and you start getting cannibalization effects as that phone comes into europe and north america and then it brings the base down across the board and that's quite a strong head wind to fight. >> doesn't that multiple already reflect that? at this level? >> well, that's the question. right now, i mean, to get down to 400, you have to put on nine times earnings. if you look at microsoft, where the growth is single digits to low double dumigits, they are
trading on six times multiples. i think apple is still a little expensive. >> so, the price target cut was deep and perhaps you are at the low end of the street for shares of apple. it's not the first we've seen. in part of a steady drum beat of negative sentiment that's come out on the stock. why now? because the fact that gross margins are declining and average selling prices are declining, we've known that for quite some time. the peak in margins was back to the 3gs phone. what made you go in and cut? >> we're seeing a brand new form factor, a new 5 and 4. we see strong first quarter, very strong second quarter. we're starting to see in december, that the early data points were a bit mixed to negative on the iphone 5, with data checks like that, we don't get the supply chain. then, on the third of january, we saw a supplier down. that's the first time we've seen a brand new product look a bit disappointing and then that
raises the question about shortening product life cycles, exhausting that $600 category and having to go down a price point. the early data came out in december, but it's only recently that we're prepared to trust that. >> the story you're talking about with apple's ability to compete in the emerging markets, at a $350 price rake, i think samsung is going to each their lunch. you talk about the margin pressure, isn't this just cost overage from the release of the iphone 5, or the mini, things where they had significant supply out there, there was obviously, you know, they didn't have -- i would argue that this means margins go higher if they've actually pulled the supply offline and in the short run, this is a positive thing for their margin. >> well, if they manage to address all the manufacturing issues early, there could be some beneficial gross margins. they got it for 36%. they've beaten by 310 basis points on average. but the last two quarters have only beaten by 130 to 150 and the street is at 13.7% gross
margin. >> quick question, stewart. so, we talk about getting long apple here, but broader picture, does the apple ecosystem that everybody raichs about, does that save them from becoming the 1980 version of sony where companies lose their cool factor? >> certainly, in the u.s., there's this lock in where people buy multiple apple products, but at the same time, you look at itunes, it's supposed to be a lock in but 50% use android. you realize most of the maps you use it are not apple apps. it's easy to make the transition from iphone to nexus without losing really anything unless you've bought lots of itunes content. that argument may work in the u.s., i'm not sure it works in the rest of the world. >> you mentioned microsoft when
it comes to multiple, is that where you see apple going at this point? do you think that longer term, that's its destiny? >> so, if you take the view that the platform angle isn't that real, then it's a handset stock. you miss one product cycle and you lose a lot of market share, you have to take a big hit in one go. we've seen it at rim, samsung, multiple times in the past, sony. so, it's pretty traditional and if the earnings growth is only going to be low teens, in line with the market, then you expect the multiple to be a discount to the overall market. >> stewart, thank you, we appreciate it. frightening stuff, but tim, on the other side of it, you've been in samsung and that seems to be the beneficiary. >> i look at their strategy, i think they're in a barbell. they have products that can compete. ill think they are going for the slower end. if people want to look at the emerging market story, there's -- india has probably 30 million smartphones. this is a country of 1.1 billion people. this is a story that people
haven't even begun to take in. the guys competing right now, rim is even a sexier brand in india than apple, if you can believe that. you have to pay attention to that. i think apple will not have the mojo to compete. >> and a quick touch on qualcomm and broadcom. >> funny you should mention that. broadcom reports at the end of the month. we've talked about this. i think people use these stocks at proxy shorts. and you saw it last quarter in qualcomm. people were short qualcomm into the quarter and they had a really difficult time getting that short back. if you're trying to do that again, i say beware. >> all right, let's get back to headquarters, check in with bertha. >> david faber confirming that dell is in talks for a leverage buyout, that would value dell shares between $13 and $14 a share. sources telling david that the equity investments from
potential investors would be roughly $2 billion. debt financing seen as oversubscribed. the deal would contemplate repatriation of some of its cash from overseas. michael dell would also have some skin in the game. he could be seen investing some fresh money in the deal. he has a 4.5 billion take in terms of shares in the company. the dell deal, he says, could be final iltzed within a couple of weeks. dell, he says, has been talking about an lbo since this past summer. melissa? >> all right, thank you, bertha. we want to go to mike in the options desk. mike, what's striking about this number is that it is significantly lower compared to what the street was anticipating. jeffries, $15 to $17. where were the options traders playing? >> i think they were probably more in line with david's numbers, actually. we saw a lot of calls trading today. some of the 12 1/2 and 13 1/2 strike calls and the 15s. but what was notable there was that they were actually some
call spreads being traded. buying 12 1/2s, buying slightly lower strikes and then selling the 15 against it. so, basically, that's a thread the needle trade. they must have priced this one pretty well. what you are expecting is some what better than the 12 1/2 level, but below $15. and that's where those things were trading, almost 40,000 calls on both of those strikes. >> all right, karen, what do you say? this would be a massive deal. >> it's a massive deal. doesn't look that attractive to me right here. you have all the down side of financing package falling apart, though obviously you have a big equity holder. i would not be shocked to see them announce the deal and you to have a shareholder uprising that said it's not enough. and if you get a big enough percentage of shareholders that want to -- i don't know if it's a delaware corp, i have to look that up shortly, but they could throw a monkey wrench into the deal of seeking appraisal rights, saying we don't think this is fair. >> good point there. on the way here, the biggest movers on the dead. we zero in on goldman sachs, jp
facebook face plants. the social media company is losing friends on wall street over its announcement of a search tool. the stock is almost 3%. let's welcome max wolf, senior analyst at green crest capital. great to have you on the show. >> thank you for having me. >> this had been rumored, the search function, there's no eta on when it's going to be available on mobile.
it seems extremely ant anti-climactic. how do you factor this into the view of the stock? >> i would agree there was an anti-climax here and we saw a classic case of buy the rumorum sell the fact. there's been a lot of discussion that search was coming. with e got an update on the road to search here. kind of a beta product. we different hear about mobile. and it was a little bit less far along, though it is making progress and i think some of the folks thought and we saw that reflected in the share price, but apparently didn't wasn't far enough to help yelp today, either. >> if we are to assume it is going to be completed and this is going to be successful, who will feel the impact the most? we saw it in yelp, was that an overreaction at all? >> one of the things that's interesting about today is seeing the tieup with bing, when the social graph doesn't have the answers you want, which suggests ongoing conversations with microsoft. again, this isn't news, but they see google, google plus as an
issue. this is about staying ahead of google. and it's an underscore to the idea that the intent in search, which has made so much money with google with their advertising is exactly what face the book is focused on. the problem, the reason this is a touch lackluster is, they're still focused on it. we don't know that they are real competition yet. they are certainly working to get there and we got a sign post. a little bit of an early valentine to wall street that seems to have snubbed the advance. >> right. but we don't know what's inside the box. the heart shaped box here in terms of whether or not this is actually going to lead to any monizati monization. is this a robust offering to advertis advertisers? >> i think it could be. the problem that facebook has had, the intend around search is exciting. if i search discount allen edmonds shoes, you can bet that i'm a buyer and serving me ads makes a lot of sense. if i talk about the shoes on my
social media platform, i might be making fun of my colleague that bought them or i might have a buddy named that and sending me an ad is a waste of time and money. and so, the irony here is, i think it is a -- it's a co competitive signal that we knew was coming and it is facebook saying, search means intent, intent means a ripe ad audience. >> it seems a little creepy. i mean, just reading about this ability to search other people, you can search people who like thai food and are friends with guy and have birthdays in november, and it will come up with a bunch of people, i mean, is there any chance that this is going to actually backfire among users? >> it's possible. it kind of the facebook and bing does what google's been doing for 18 months story. there is a social feature on search. you can plus one, you can see your search to other people. so, google's had it significantly different social search feature for awhile.
that being said, look. the entire social web suffers from this fine tuning. it's great that there's a free bathroom, but there's a camera in the bathroom and if you really have to go, the free bathroom is really exciting, but if you don't like the toilet cam, there's an issue there. >> it's amazing how fast it gets to the toilet at the end of the day. >> that's where we go on this show, anyway. >> very good. >> max, thank you for the time. >> thank you. >> let's bring in seema mody. she's got the twitter reaction. >> graphic search. >> what are the -- what's twitter saying about this? >> social media today was a great way to track the sentiment, the change in sentiment around facebook shares. according to stock to its social sentiment turned slightly bearish before the event, reflecting an expectation of sell the news and bearishness
around facebook increased by 40% during and after the product announcement. and now tracking the social momentum, the volume of messages around facebook, that increased 400% in today's trade. let's get straight to our tweets and messages now. stephen harris tweeting, today's move, shocking. a much hyped announcement related to facebook failed to meet market expectations. does it remind you of anything? so, melissa, you have people comparing today's announcement to facebook's ipo. >> it seems like -- >> that's not fair. >> why is that not fair? there is all the hype and they come out and it lands with a thud. they've got this product, it sounds great, but it's beta and we don't know when it's going to be available on mobile. >> facebook is growing their revenue 40% in terms of advertising. their growth into mobile is undisputed. we don't know where it's going. this is a warning shot. a warning shot to yelp, all the guys in the social media space. this is a fine tuning of what's going on out there.
for people to have it all expected to happen today, it's just facebook saying, we're here and going to get better than this. the sell offs in things like yelp is probably trading biles but long-term, i wonder if they can compete. >> on that note, we do have a lot of tweets around yelp. just get straight to that one. nancy writing, i think yelp should be much more worried about facebook graph search than linkedin. that's the big question on the street. >> i think google gets off easy today. but the long-term pressure here, think remains. as long as facebook goes revenue on the top line -- >> i don't know. well before the ipo, all these analysts saying facebook is going to disintermediate yat search. here we are two years later and they are announcing something in a beta stage for search. they haven't made -- >> the point is, these guys have 600 million daily users and a wealth of data that google doesn't have. this is powerful.
they haven't found a way to use it yet. who said they were going to unleash the engine in the development of this product is changing by the day. to think that these guys can't compete -- i'm not long facebook here. i'm just saying you -- >> sounds like it. >> mel is in my grill. >> sorry, i don't mean to. >> bringing the heat. somebody's got to. >> i'll take tim's back on this. it's kind of stock that, first of all, very newsy. the feel on twitter, i mean, come on. if it holds 27 1/2, you buy it. don't get too excited about this stuff. >> all right. seema mody, thank you. let's hit pops and drops. drop here for sap, down 4%. tim? >> these guys really do something, they're the largest business software company in the world, missed analyst expectations. north american sales are slowing a bit though europe is getting better. >> pop for the gap, karen. >> i don't know if anything specific to the gap here. just a very good day for retail all across the board.
>> pop for chesapeake energy, up 2%, guy. >> since november, this stock has vacillated between 15 1/2 and 18. pushing up against that level now. i think if you want to short a stock, ches bee around 17 1/2 is a good play. >> drop for lululemon. >> the stock traded five times its average daily volume. if you go into earnings season and somebody misses the top linened a it's a big stock, watch out below. >> avon a pop today, the move 5%. mike? >> under normal circumstances, you might be saying it's playing catchup with the elizabeth ardens of the world, or maybe on retail numbers, but really this is not normal times for a name like this because it's a multilevel marketing company and it is tracking herbalife these days, which had a big pop today as people aren't concerned about the pyramid scheme. >> we have a pop here for snowball fights. >> what? >> after becoming the first state to legalize recreational
marijuana, washington has another claim to fame. sight of the biggest snowball nig fight. >> after they got very high. >> the snowball squirmish bet out a record set by south korea in 2010. >> what? >> who knew. . >> can you throw a snowball? >> of course i can. >> can you throw like -- >> was i -- >> do you throw like a girl? have you seen that toyota commercial where the father's trying to show the son how to throw and he throws like you? >> do you throw that way? >> are you kidding me? i've got a rocket for an arm. >> if there were snow, i'd do it. >> if. coming up next, from apple to the flu, we hear from the technician hedge fund legend. but first, goldman sachs and jpmorgan report in less than 24 hours. what is riding on those numbers? for "fast" straight ahead.
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we asked total strangers to watch it for us. thank you so much. i appreciate it. i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money? if your bank takes more money than a stranger, you need an ally. ally bank. your money needs an ally. goldman sachs and jpmorgan reporting earnings before the bell tomorrow. mary, over to you.
>> hey there, melissa. earnings forecast come at $378 a share. revenues seen rising 31% to $7.9 billion. the firm's return on equity, a measure of profitability seen rising to about 11%, but analysts say it is inflated thanks to a $500 million gain from the sale of its hedge understood administration business. gains in goldman's unvestment and lending portfolio, thanks to investments like its stake in the commercial bank of china. within its businesses, revenue at fixed income currencies trading their forecasted to raise yearov over year. equity tradings gains helped by the sell of the hedge fund busine business. this, of course, being the fourth quarter, analysts are keeping a close eye on the compensation numbers. they do expect the ratio to be around 32% from the full year.
it's closer to 41%. that would put it below 2011's ratio of 43% in the pre-crisis levels of 46%. now, over to kayla for a preview of jpmorgan. kayla? >> thank you, mary. consensus estimates call for $116 per share on $24.4 billion in revenue. both of those figures would be lower than last quarter but higher than the last fourth quarter of 2011. still positive numbers considering the scant deal throw during the fiscal cliff impasse and the low interest rates. a few things to watch for. first, capital markets revenues expected to be lower than the third quarter, but not down 20% like doug bronscretein predicte. housing turned a corner and uptick in that business k0u8d offset continued margin pressure from low sbrems rates. in addition to earnings, the bank will release a report detailing the london whale trade. a bungled dririve position that lost the bank $6 million.
that trade caused jpmorgan to suspend its buy back program which it hopes to reinstate. melissa? >> thank you, kayla. so, in terms of setting the tone, these will have a major impact when it comes to some of these brokers. >> yeah, they will. two different things. banking business and broker. we're long jpmorgan, as you maybe know. i was hoping she would have pictures that would go along with her discussion of what the earnings are tomorrow, but not. >> i could just go home and -- >> i am long, you know, i think we'll see good things out of jpmorgan. a couple of good things to look for. net interest margin is another one. they have a little less exposure in term lgs of, they have more, other income than just net interest margin and we'll see also how the banking business does, the capital markets business. that, obviously, is a read through to goldman sachs. >> keith? >> a good example of how you use market beta to your advantage. i don't have to trade the jpmorgan or the gladman event.
i have to understand or think i understand the expectation of the event. going into today, it is a pretty high expectation that these things could go up, given wells fargo came down. but that could happen because it can deliver better net interest margin, which is really the issue with wells fargo. we'll have to see if they deliver. >> and jpmorgan tends to outperform its peers a week, a month after its announcement. jpmorgan offers the best value, if you look at the big money center banks. and the wells fargo number gave a great read through an, in fact, i think the organizations business, which is plus 10% of their overall revenue basis, something conservatively priced into people's expectations. i think people are saying, the investment banking and the sales and trading revenues are people that have marked to almost nothing, in other words, in terms of the growth, the surprise is on the upside next year. and you get this also by talking to guys on the street, seeing where volumes are. i think things probably bottom to the end of the third quarter and i think all the doom and gloom over capital markets is
seen its worst. >> is it troubling or is it a good sign that global investors are overweight banks for the first time -- >> i can hear it in your voice -- >> what? >> what? >> i'm asking you a question. >> of course it's more troubling -- you know -- you know why you asked the question. you asked it specifically to me, so, yes -- >> answer her. >> yes, it is troubling. but back in mid-december, we talked about goldman sachs specifically, we said gs is probably something you should earn into their earnings release, which is tomorrow. and the stock is probably rallied a good 20 bucks or so since then. so, i don't know what's going to happen post-earnings, but leading up, it's been a good trade. all bets are off after tomorrow. what i could see happening in gs is a couple dollar rally and a late day selloff and that marks the top for the short-term. all right. coming up next, from apple to the flu, we hear from steve koben. and why your neighborhood
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when he needs a market technician? he calls tom demark, and that's who we have on the program tonight. he joins us tonight on the fast line. tom, presure and honor to have you on the program. >> great to be with you. thank you for the invite. >> got to ask you about apple. what is your call? >> september 21st, we turned bearish on apple. it was above $700. and our primary indicator, sequential, produced a 13 that day and we made a prediction that the stock would go down to $494. $494.97 to be precise. we've held to that forecast all the way down, despite those intermittent rallies. and what we saw was a free fall, something akin to what we experienced in july, august of 2011, into the stock market low that ultimately bottomed october 4th. we saw freefall decline and typically what you look for is a rally and then either a further
decline of an equal amount from the prior decline. so, in the case, with apple, we declined from about $705 down to $505 and then we rallied up to $595 or so. if you were to take one half of the prior decline and subject it for that high, you arrive at 494 1/2. and that was a calculation we derived with the rally we experienced the first of this year. we also projected between $49449 -- $494, $495. >> hey, mark, it's tim. you say you're not a technician. >> no, not at all. >> and one of the keys to the apple call is something that's in synthesis with all of your indicators. with technical people, you get to a placy the road where you can go one way or the other. this is a case where gove yot indicators that you track, lining up together. how powerful of a call is this?
>> well, they're an converging, tim. >> ferocious move. >> well, they are all converging. this is something akin to the low we had december 4th in the shanghai index. this looks like a very strong rally of at least 22%. we wouldn't be surprised tomorrow to see apple gap up above $494, $495 despite trading lower in the aftermarket today. and just move forward right from there and be strong for the next couple weeks. and reach $600. we think the low is in. if the market were to decline further from here, we could see another $100. we don't see that happening. tomorrow, we should produce a 13, which is the bottom. we have a down opening tomorrow, that 13 will appear. and there's no way we can erase it. the market is exhausted. we pride ourselves in being anti-trend, identifying trend exhaustion. the down side trend, we're very confident it exhausted itself. >> tom, you are saying that the bottom is in for apple. >> yeah, bottom is in today or
tomorrow, yes. >> today or tomorrow. okay. let's move to another stock here that is very much in the news, and that is herbalife. >> well, we turned positive on herbalife recently when it moved below $26. and that, what happened there was the same thing. we experienced a decline from april, around $73, down to $42. we made a low and then we had a rally into the end of july that topped around $56, $57. in this case, the decline was $30. and instead of taking one half, freefall decline, we took the full $30 decline and that projected down around $26. at the same day that the stock moved below $26, we identified the low with a 13 and we made a forecast that the stock would rally $55 to $57 in a matter of, we thought, a month to six weeks. and that's what we're seeing right now. we see the stock currently at a count of seven. and we need six higher closes
just to make it to identify the peak, which should be $55 to $57. >> right. and, your methods, you are able to apply this to almost anything. so, give us the outlook on -- i want to know if i need to get a flu shot at this point, tom. >> if you look at the chart that's on the screen, back in july of last year, we bottomed with the percentage of illnesses. this is produced by the cdc. and then in february, march, we topped around 13, as you can see on the chart. made a low in august. and just recently, two weeks ago we made a 12. so, we could see one more spike but i'd say if you haven't gotten your shot, i'm not going to be responsible -- have your neighbor get it for you. >> sweet. >> tom, thank you so much for joining us. hope you'll be on the show again. >> thank you very much. >> tom demark. very decisive calls here. >> yeah. >> today or tomorrow, a bottom in apple. >> that's what he gets paid to do. he's got to make a call. but it's really the cross
section of behavioral and quantitative research. there's not a lot of people with not very good calls, so, at the end of the day, that's why demark matters. he makes very good calls on timing which very few people are willing to do. >> demark's stuff -- i'm a fundamental guy, in other words, i'm looking to pick stocks. he says he's a market timer. we always care -- don't tell me what to buy. tell me when to buy it. i know that sounds ridiculously simple. this is why i think demark's work works so well with some of the biggest hedge funds because he gives guys at least the road map where this stock is oversold and you need to buy weakness. >> you take what he said about herbalife, where he says it's the bottom, the bottom is in and you have to wonder what a bill ackman is thinking at his own -- >> oh, my god. the guy's got to be freaking out. >> unless he's out. >> no, i -- well, he should cou out. he would haven't to show us in a filing, though that would -- he wouldn't have to show us that. the one thing i'm wondering, the
phenomena we were talking about on the call today, when you lend your securities out or borrow them, forget actually which side, i'm wondering if somebody like a dan loeb takes his shares out of a margin account and puts them into cash account, that takes them out of eligibility to be shorted. >> right. >> if he's not the only one doing that, i wonder if that has the ability to create a short squeeze. and if we look, you know, today, we try to borrow shares, there was no boar record available. >> when a stock goes from $25 to $46 -- >> it's bounced back. recovered everything it lost from the bill ackman -- >> you have a lot of motivated buyers. when you have a signal, all you have to do is validate it. what do i get my guys to do? do some research on herbalife. they are screaming buy to me. anybody that shorts this stock has to play defense unless ackman has a catalyst that is not himself. >> well, but to your point, karen, you are saying the short squeeze, it could theoretically continue as the shorts get out,
there could be more in but if you take the shares off the market -- >> out of circulation. >> it becomes smaller and the squeeze becomes more painful. >> and guy being as old school that he is -- >> that's my thing. >> i am old school. if you think this hasn't happened, it happened before. in the early 2000s, irvin jacobs, probably been on the network from time to time and carl icahn, who is a regular on the network, butted heads where jacobs actually took out an article empl'e imploring people short sales. and it went from $4, rallied to $18. he wound up being right and then carl wound up winning in tend. >> happens a lot. >> always useful. all right, coming up next, why america's shopping malls
could be a dying breed. we go dead mall walking with one of the industry's most vocal skrit ickes. first, surf's up. two areas you may want to bail out on. stay tuned. with the spark cash card from capital one, olaf gets great rewards for his small business! pizza! [ garth ] olaf's small business earns 2% cash back on every purchase, every day! helium delivery. put it on my spark card! [ pop! ] [ garth ] why settle for less? great businesses deserve great rewards! awesome!!! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet? what are you doing?
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sometimes it's tough to buy the losers and sell the winners, so, let's play a little hold 'em or fold 'em. first up, celgene. gaining momentum after the announcement of its upbeat earnings. guy? >> you know how to play this game? >> i'm the best at this game. >> stop that. stop. >> hold 'em. hold 'em. put the graphic up. throw that sucker up right now. bank of america gets on board today. they raised their price target to $150. how long have we been talking about this stock? >> forever. >> forever is the answer. and now everybody is jumping on board. >> 99 1/2 today, sounds like he's whining a little bit. must be time for the baby. >> hold 'em -- >> there it is. >> hold 'em again. >> next up, dj transports. keith? >> i said hold 'em. provided the dollars stays
strong, this is a beast, one that you do not want to be short. >> let's move on. data from a retracking firm showed 10% of shopping malls in america may fail in the next decade. let's take a deeper dive with jeff jordan, chairman of open table and a partner at heandreen and horowitz. in terms of your data, and your analysis, what have you found? >> well, ironically, i started my career as a physical retail guy. i was cfo of the disney store. only of late that i got involved in e-commerce. the total retail pie is growing extreme little slowly and onlike is taking larger and larger shares of that pie. of the total pie online, something like 8%. if you rule out food and personal care, it can be much higher in the high teens or the 20s. so, the part of the pie remaining for physical retailers
is rapidly shrinking and the number of malls is not shrinking. so, as retailers are getting into more and more distress, that has to translate into stress in the malls. >> we were just recently talking to the ceo of ddr, which on rates a lot of malls out there. i'm shurp up are aware of the company and he said that a lot of his most successful retailers have a multichannel approach and that you need the physical store location in order for customers to come in, feel the merchandise or do returns. do you see that multichannel strategy working or do you think that really malls are going to close and retailers are going to operate only online? >> i think marginal malls are going to close. you need the multichannel strategy but sales aren't growing, even with their online segments, and the part that's going through the physical stores is shrinking. i did an analysis, i took the top 100 retailers, big box
retaming, accoe tailing, accorde national retail association, and none of them are opening stores. if the biggest retailers aren't opening stores and nones are closing them, it does not bode well long-term for the mall. >> jeff, it's karen. i was short the retail malls for just this reason and yet i continually saw they were actually able to fill those spots as occasionally they would have a circuit city or linens and things, something like that, and yet they were able to lease those stores right back again and, in fact, the whole space has done pretty well. what's going to change now? >> well, one thing that's happening is the rent at which they're leasing that space have, are down substantially from 2009 and are not recovering. i used to work on union square in san francisco, some of the premier retail space in america and there are lots and lots of openings. the building across the street,
right on the same corner with the apple store and with the mall, stayed vacant for two years and it's prime retail space. so, there are over 200 malls in the united states, over a quarter of a million square feet, that are over 35% vacant. you walk into a mall that's over 35% vacant and it's a ghost town. >> right. all right, jeff, we're going to leave it there. thank you for joining us. >> thank you. >> jeff jordan. >> galleria. when you go to chess king and you walk into the galleria mall -- >> i was at the mall the other day. tower records, i bought -- >> i'm sure you were. >> i bought a six pence none the richer cd. >> karen, back to you. you were short ddr at one point. you took it off, though, right? >> a number of them. i think it gets -- dan's point of not being enough demolished malls. i wouldn't be short just because -- i mean, i've gotten it wrong every which way, i just can't play in the -- >> all right. >> leave it to jeff gordan. >> on deck, what does buying some bullish bets in a major
money." morgan stanley is reporting easte earnings this week and mike, you noticed interesting activity. >> we saw substantial bullish activity in the options markets. if you look at the 19, 20, and 20 1/2 strikes and puts, most active were the 20 1/2 thats expire on friday. 20,000 of those traded at a price of 35 cents. bullish bets that the stock would be above $20.85 by friday expiration, up 2 1/2% from where it closed. this is a big change in sentiment from where the open interest was because before now, puts outweighed calls. >> all right. and more options action every friday at 5:00. let's play the good, the bad and the ugly, starring guy adami. let's go with the good. guy was looking ahead to goldman's earnings. here's what he had to say. >> the trade has been with these guys around earnings, you either
short them into earnings and then look for the bounce, which has worked. but in this case, i think you stay with the long position into their january release and then you sell it. >> nice call there. shares of goldman up 7%. >> we talked about it. >> we did. >> move on. that was good. >> no, no. >> remind the folks, long it into earnings, get out of it. hopefully you sold it today. i don't know what's going happen tomorrow. if you took that advice, made that trade, nice trade. move on. >> you said -- >> up a couple of bucks. see what happens. i'm here tomorrow. >> let's hit the bad. the same day guy made that call, he was prescribing a trade in the pharma space. take a listen. >> generic space has been doing well. watson pharma, all-time high. i think it goes higher. >> instead of going higher, they are down 5% since that call. so, what do you do here? >> wearing the same shirt. >> were you? >> same night. >> goldman downgrade hurt me the other day, january 11th, but
their report in february -- i still think, watson pharma is a buy. where did it close? 87 1/2? i like that. >> you'd be a buyer. you hold 'em. >> yeah, no, no, that's a different game. don't try to trick me. >> seeing if you are paying attention. >> do we have a ugly? i love the ugly part. >> your tie. >> no -- what's that? >> meggings. always a good one. >> that was this weekend, i had that outfit on. i was watching tim's band. >> all right. >> embarrassing with the same outfit comes on again. >> none the wiser. first move tomorrow when we come right back. stay tuned. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros
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